Draghi warns about eurozone’s economic outlook

Mario Draghi, the president of the European Central Bank, today said that the eurozone economy was likely to remain weak for some time, as he welcomed a vote in Greece’s parliament that approved the government’s latest austerity measures.

Draghi, speaking after a meeting of the ECB’s governing council at which it was decided to leave interest rates unchanged, said that national governments needed to carry on implementing deficit-reduction measures and structural reforms.

“The growth momentum is expected to remain weak,” Draghi said.

He was speaking a day after the European Commission sharply cut growth forecasts for 2012 and 2013.

He added: “The necessary process of balance-sheet adjustment in the financial and non-financial sectors and an uneven global recovery will continue to dampen the pace of recovery.”

However, he said that there were some positives and that money flows had improved since the ECB had announced its Outright Monetary Transactions (OMT) programme – to buy government bonds in unlimited amounts – in August.

The programme has not yet been activated, with Mariano Rajoy, the prime minister of Spain, hinting this week that no imminent request would be forthcoming from his government unless he was convinced that such measures would reduce his country’s borrowing costs.

Draghi refused to be drawn on whether Spain should make a request for help.

“We stand ready to act,” was all Draghi would say. “OMT is a fully effective backstop.”

Draghi said that the vote in Greece’s parliament yesterday that narrowly supported the government’s latest austerity measures “represents real progress, especially when you compare it with the situation just a few months ago”.

Eurozone finance ministers are expected to discuss whether to disburse Greece’s next €31.5 bail-out instalment at their meeting on Monday (12 November).

The governing council decided to keep the main eurozone interest rates unchanged. The main refinancing rate will stay at 0.75%.

Draghi said that high energy prices and increases in indirect taxation such as value-added tax in some eurozone countries meant that inflation rates were likely to remain above 2% for the remainder of 2012.

At the end of last week Britain surprised everyone—even the government, it seems—when it announced third-quarter GDP growth of 1 percent. It was Britain’s best quarterly performance in five years. This result followed the most rigorous austerity measures the British government has imposed since World War II, and it seemed to validate the neoliberal policies favoured by Prime Minister David Cameron and other conservatives. “These figures show we are on the right track,” declared George Osborne, Cameron’s chancellor of the exchequer. “This is another sign that the economy is healing and we have the right approach.” The bond and share markets in London seemed to agree, each taking a bounce upward after the economic results were announced. If you do not tell the truth about yourself you cannot tell it about other people. -Virginia Woolf, writer (1882-1941) I thank you Firozali A.Mulla DBA

At the end of last week Britain surprised everyone—even the government, it seems—when it announced third-quarter GDP growth of 1 percent. It was Britain’s best quarterly performance in five years. This result followed the most rigorous austerity measures the British government has imposed since World War II, and it seemed to validate the neoliberal policies favoured by Prime Minister David Cameron and other conservatives. “These figures show we are on the right track,” declared George Osborne, Cameron’s chancellor of the exchequer. “This is another sign that the economy is healing and we have the right approach.” The bond and share markets in London seemed to agree, each taking a bounce upward after the economic results were announced. If you do not tell the truth about yourself you cannot tell it about other people. -Virginia Woolf, writer (1882-1941) I thank you Firozali A.Mulla DBA

At the end of last week Britain surprised everyone—even the government, it seems—when it announced third-quarter GDP growth of 1 percent. It was Britain’s best quarterly performance in five years. This result followed the most rigorous austerity measures the British government has imposed since World War II, and it seemed to validate the neoliberal policies favoured by Prime Minister David Cameron and other conservatives. “These figures show we are on the right track,” declared George Osborne, Cameron’s chancellor of the exchequer. “This is another sign that the economy is healing and we have the right approach.” The bond and share markets in London seemed to agree, each taking a bounce upward after the economic results were announced. If you do not tell the truth about yourself you cannot tell it about other people. -Virginia Woolf, writer (1882-1941) I thank you Firozali A.Mulla DBA

At the end of last week Britain surprised everyone—even the government, it seems—when it announced third-quarter GDP growth of 1 percent. It was Britain’s best quarterly performance in five years. This result followed the most rigorous austerity measures the British government has imposed since World War II, and it seemed to validate the neoliberal policies favoured by Prime Minister David Cameron and other conservatives. “These figures show we are on the right track,” declared George Osborne, Cameron’s chancellor of the exchequer. “This is another sign that the economy is healing and we have the right approach.” The bond and share markets in London seemed to agree, each taking a bounce upward after the economic results were announced. If you do not tell the truth about yourself you cannot tell it about other people. -Virginia Woolf, writer (1882-1941) I thank you Firozali A.Mulla DBA